Businesses in the North West are focusing on the next generation with more than a fifth of owners planning to build their company as an inheritance for family members, according to research from Santander Corporate Banking.
The research underlines the importance of family-run firms to the economy – a recent study by University of Birmingham estimates around 21% of all UK workers are employed by family-run firms.
Santander’s study also revealed firms in the North West are highly committed to expanding their businesses in the long-term – with around 78% of owners citing their ultimate business aim as ensuring their business has a long-term future.
Passing the business on as an inheritance is one of the strongest motivations for the long-term, along with expanding regionally and building the business to be sold to fund retirement. Around 31% of owners want to expand regionally while 23% plan to sell their company and retire.
Just 11% of business owners are planning to run-down and eventually close their company. Nationally that rises to 25% of sole traders who are less likely to be able to sell their businesses.
Sue Douthwaite, Divisional Managing Director for the North West at Santander Corporate Banking, said: “Being able to pass on an inheritance to the next generation is powerful motivation for succeeding in business and it is striking that keeping it in the family is so important.
“Focusing on inheritance tends to drive long-term thinking on business strategy and that is clearly good for the future of companies even during tough trading times.
“It is encouraging to see the vast majority of businesses do have a long-term aim for the development of their company. Long-term thinking requires a banking relationship to help support growth and Santander is committed to working with companies to help them unlock their potential.”
For the UK as a whole, research shows the bigger the company, the more likely it is to be handed down the generations – 28% of owners of companies with a turnover of more than £20m. say their ultimate aim is to establish a dynasty.
Around 29% of manufacturing firms are being built for the next generation to take over, compared with 17% of those in the services sector.